Latest estimates of US loyalty scheme participation
Membership of US loyalty programmes is estimated by Colloquy to have reached 1.3 billion, which is more than four times the population of the US. The magazine's Q4 2006 analysis of a dozen business sectors concluded that the average US household belongs to at least 12 loyalty programmes.
The Colloquy research also showed that active participation in loyalty programmes stands at an average of 39.5% across all sectors examined. However, Colloquy's definition of active participation varied by industry "from a one-time shopper or flyer down to an inactive name in a database".
Programme participation While each household in the US has membership of an average of 12 loyalty programmes, active participation was observed in an average of only 4.7 of those programmes.
According to Colloquy senior director Kelly Hlavinka, "Loyalty memberships are flying dangerously high. Fat membership roles may look good in a press release, but active loyalty programme members are the only members who count. Marketers must adopt highly targeted enrolment strategies and allocate resources where they accomplish the most good."
As Hlavinka warned, this suggests that loyalty programme operators across the board must pay close attention to enrolling the right customers, driving active participation in their programme, employing reward bonuses selectively, and using loyalty data throughout the organisation to build customer insight.
Other key findings Among the report's other findings, four business sectors (airlines, financial services, grocery and specialty retail) accounted for 57% of the total loyalty programme membership. However, airline reward-seat inventory continues to shrink and mileage expiration periods are becoming shorter, so mileage currency is expected to continue to devalue.
According to Colloquy, financial services loyalty programmes (fuelled largely by credit cards with rewards as primary competitive weapons) are now in a "golden age" with 239 million members, and 164% growth since 2000.
At the same time, grocers are now fighting a widespread consumer perception of loyalty programme ubiquity and sameness, and are expected to begin to adopt loyalty models that allow for richer customer segmentation, perhaps funded mainly by packaged goods manufacturers.
Hotel loyalty programmes are likely to enjoy modest growth, the report suggested, as consumers purged from airline frequent flyer roles are migrating to hotel programmes that offer better value for money.
Gaming companies' profits are likely to allow them to incubate the best loyalty practices in the coming years, and the rest of the loyalty industry may well end up following their example. The restaurant industry is also poised for a loyalty renaissance, the report noted.
Intelligent deselection of members? However, according to Colloquy's editorial director Rick Ferguson, "If loyalty programme membership growth continues unabated, we may all end up with massive headaches. The biggest and potentially most progressive method of making programmes more successful is the one thing that loyalty marketers are most loathe to do: trim the fat from their membership roles."
The data for the census was obtained from various sources including press releases, loyalty programme web sites, shareholder reports, research reports, other publications, and personal interviews. Business sectors covered included airlines, financial services, hotels, restaurants, gaming, grocery, retail fuel, specialty retail, drug and discount stores, department stores, internet, and 'miscellaneous'.